How Much Does An Inexpensive Franchise Cost?

There are three aspects to coming up with the kind of money it takes to buy a franchise – coughing up the initial franchise fee, finding a place from which to do business, and paying for supplies and inventory. Cheap franchises are an especially hot commodity in a down economy. But don’t be fooled by a low price tag. The cost of entry for an inexpensive franchise is only one element of potential success. There are definitely cheap franchises out there, so let’s do a little exploring.

Cutting Franchising Costs

Do you want to own a top-name fast food franchise? Be prepared to plunk down at least $50,000 as an initial franchise fee, and you’ll spend close to a million dollars to get it up and running. There’s no question that owners of a McDonald’s restaurant or a Domino’s Pizza place make tons of money, but the purpose of this article is to uncover the ways in which the average Joe and Jane can become independent business owners through cheap franchises. Number One on the Hit Parade is to find a company that keeps its franchise fees low. While the definition of “cheap” can vary from one person to another – your idea of a cheap bar of soap is one that costs a buck, while a movie star may consider one in the $10 bin to be a bargain – but we can all agree that a four-figures number is definitely better than one with five figures. There are a surprising number of franchises out there with franchise fees under $10,000, and the possibilities under twenty grand is simply mind blowing. Look for simple concepts, fairly new businesses, and well-established franchisors seeking to break into new geographic markets. A brief Internet search using the term “cheap franchises” turned up such possibilities as candy bouquet delivery, health insurance consultancy, vending machine operations, and concrete repair – each of which requires a cash outlay of less than $10,000.

The Inexpensive Franchise: Work From Home

It should be obvious that the best way to keep costs down when buying a cheap franchise is to eliminate the need for a separate place of business. Buying or even leasing retail space can account for a huge chunk of capital – most franchisors estimate that it can account for as much as 70 percent of the overall cost of a franchise business – so the best way to avoid this expense is by operating a franchise from home. The choices here are practically endless, including businesses that you operate IN your home (such as daycare or eldercare, light manufacturing, or internet sales) as well as those you operate FROM your home. These might include cleaning services, repair services (everything from home appliances to PCs to windshields), and a wide swath of consulting gigs. The purpose of buying a franchise, of course, is to enjoy the three benefits of franchising: (1) Sell a brand-name product or service; (2) Follow a proven business plan to success; (3) Take advantage of extensive training and follow-up support.

The Cheapest Franchises and Cautionary Tales

As noted above, the price alone should not be your sole determining factor in deciding which cheap franchise to buy. All of the other elements of smart franchising should come into play. Ask yourself these questions:

How much will I pay in total, not just for the franchise fee?

What is the company’s track record for success among its other franchisees?

How well do they support their operations, and how extensive is their training?

What will I spend every month on royalty fees and inventory?

Is this a business I can see myself running five or ten years down the road?

There are undoubtedly other elements worth considering, but these should be at the top of your mind whenever you’re looking at buying an inexpensive franchise – or any franchise, for that matter.

Above all else, always remember these words, made famous by Apple Founder Steve Jobs:

About the author

George has an extensive career that spans over 50 years Owning, Operating and Selling Businesses of all kinds throughout the United States. Instead of investing in popular Stocks and Bonds, George forged a successful career investing in California Business Opportunities ~ and is widely recognized as a Leading Authority on Jumbo-CAP Investments, securing Business Acquisitions and formulating Exit Strategies for Small to Medium-Sized Businesses.
Feel free to call George anytime: 1-800-727-2100, Ext. 202!